Everyone doesn’t need $1 million for retirement. But you might, if you don’t have a lot of guaranteed income sources after you’ve stopped working or think you’ll have high expenses.Saving for this goal can seem intimidating. But with some planning, hard work, and discipline, it can be done. Here’s how.
Slow and steady wins the race
You’d need $33,333 saved each year for 30 years if you wanted to save $1 million with just your contributions. But investing can help you achieve this goal with a lot less money. An asset allocation model that consists of 100% equities grew at an average rate of 10.29% per year between 1926 and 2019. If you saved and invested $5,250 a year and earned this average rate of return over 30 years, your money would grow to $1,006,316.If you’re starting to save late and don’t have 30 years left before retirement, you can still reach this goal with higher annual contributions. If you have 25 years until retirement, saving $8,900 each year earning this rate of return could get you to $1,008,469.
